Persistence, price and the personal touch
Deep Sea Electronics plc Case Study
The personal touch has proved pivotal for Deep Sea Electronics plc in the lucrative Indian market. The company, which manufactures control and monitoring equipment for generators, began exporting to India five years ago and is confidently poised to expand sales three-fold over the next five years.
The firm, which employs 116 people, has build up a solid customer base in this rapidly expanding marketplace, selling directly to 20 separate manufacturers but also using the services of an agent.
The company has dramatically redefined its sales strategy over the past decade. Ten years ago domestic sales accounted for 80 per cent of its production. Now the position is reversed with between 85 and 90 per cent going overseas.
Managing director David Thomson insists that would-be exporters need to be persistent to secure a foothold in India.
“It’s a difficult market to enter, although it’s going through change,” he explains. “Up until now it’s been obsessed with price and although it’s still the main driving force it’s not as much of a factor as it was previously.
“You’ve got to be confident in your products’ quality, reliability and value – and don’t give up. For the first several times you visit they will hit you with price, price, price and it’s very easy to walk away. But you need to continue to visit and promote why your products are more expensive than local ones and eventually the price problem will degrade.”
Representatives from Deep Sea Electronics visit India three or four times a year and the firm also participates in exhibitions in India. Mr Thomson makes regular visits himself.
“It’s absolutely essential to go there and have face-to-face meetings,” he adds. “Typically you would be talking about four visits over twelve months before sales opportunities open up.
“We’ve used distributors in the past and still do. But distributors should be viewed as an addition to direct sales and not as a replacement.”
It is important not to regard India as a single homogenous market but rather as a collection of interlinked markets. There are huge variations between different regions. Many companies find it easier to concentrate on a single region.
Tariffs may have come down from a high of 350 per cent during its protectionist days but still remain relatively high, although the continuing trend is for these to be reduced. Customs duties can be complex and there is a one per cent handling fee on top of basic duties.
India’s key industries include telecommunications, which is growing faster than anywhere else in the world as well as chemicals, food processing, steel, transportation equipment, cement and textiles which account for a fifth of all manufacturing. Also crucial are mining, petroleum, machinery, software and pharmaceuticals. Indian companies also control prestigious international brands such as car-makers Land Rover and Jaguar. It has one of the fastest growing automotive sectors in the world. Its home-produced Tata Nano is the cheapest car on the planet.
Other key sectors include aerospace (civil), agribusiness, biotechnology (growing at a staggering 37 per cent a year) and pharmaceuticals, construction, creative and media, education, skills and leisure, engineering, environment, financial and legal services, healthcare and medical, ICT, oil and gas, power, transport and water.